Factors1) Net Sales of Powertrain/Driveline Segment-2013 sales for the Powertrain/Driveline segment increased by 10.7% compared with 2012, mainly due to sales increases in North America, Asia and Europe.

2) Operating Income of Powertrain/Driveline Segment-The 2013 operating earnings for the Powertrain/Driveline segment increased by 36.9% compared with 2012, mainly due to improved margins resulted from production volume increases, and a lower amount of start-up costs in comparison to the level of start-up activity in 2012.

Acquisitions

-In October 2013, the Company announced that it has completed its acquisition from Muhr und Bender KG (MKG) and Mubea Motorkomponenten GmbH (MMKG) of MMKG’s business of manufacturing and distributing assembled camshafts, located in Hildburghausen, Thale and Thale-Warnstedt, Germany. The camshaft business will be operated out of 3 locations in Germany employing approximately 110 people and comprising nearly USD 25 million in sales with an expectation to nearly double in size in the next 4 years. (From a press release on October 1, 2013)

R&D

R&D Structure

-The Company has four development centres – one in Ontario and one each in Michigan, Germany and Hungary. The Company's McLaren Performance development centre provides much needed capabilities in terms of product design, development, testing and analysis. McLaren Performance is historically known for its expertise in the engine area but has gained extensive knowledge in transmission and driveline systems within the last several years mostly due to the investments and growing product expertise of the Company's driveline systems operating group.

-As of December 31, 2013, McLaren Performance, plus the engineering and design staff consisted of approximately 950 people in all Company plants.

New Product

<Electric Rear-Wheel Drive Unit>-In Jun 2013, the Company has developed an electronic rear-wheel drive unit. The motors of the drive unit are designed to steer the rear wheels of vehicles based on a front-wheel-drive architecture. This will help automakers reduce the development lead-time for hybrids and AWD vehicles. The drive unit is composed of two motors, lithium-ion batteries, a control unit, a water-cooling unit and a differential gear, enabling an electric-only drive up to 30 kilometers. The company offers three size options for different vehicle sizes and drive powers, targeting applications on gasoline engine vehicles, diesel engine vehicles, HVs and EVs with a front-wheel-drive design. The control system has been developed jointly by Linamar and AVL, an Austria-based developer of powertrain systems, which will also support vehicle application works. Linamar says adoption of the rear-wheel-drive unit on gasoline engine vehicles will lead to as much as an 80 percent reduction in fuel efficiency. (From an article in the Nikkan Jidosha Shimbun on Jun 13, 2013)